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The Emergence of Money as a Commodity: A Journey from Seashells to Coins...

Updated: Jan 8, 2023

Written by Pir Servan Tutsi


The first appearance of money usually dates back to the invention of the coin in Lydia, followed by an analysis of the economic enterprises that came with the discovery of money. However, the story of money changes according to the social, cultural, and political needs it fulfilled as well as economic lives, much before the first coins.


In classical economic theory, money is shown as a commodity that emerges to eliminate the deficiencies of the barter system and takes the place of barter for commercial purposes. The biggest challenge of swap is that users must intersect. If a farmer with wheat wants to buy milk, it is not enough that he can only find a farmer who is short. The farmer he finds must also want wheat. It has long been a popular view that human societies, with the technology to neither achieve these angles of influence nor store them for long periods of time, invented money under the cost and cost of commercial use, resulting in the growth of the shortcomings of barter.


However, this narrative also contradicts historical reality, while ignoring the operations that certain parts of the barter have against money. Barter did not lose its currency after the invention of money, and it became popular again as a commercial tool when money could not afford its costs throughout history. Between 1945 and 1954, 588 non-monetary trade deals have been done between countries. The observation records of England in 1946 sold Rolls Royce Nene jet engines to the USSR is just one of them. In 1990, the USSR purchased vodka and warship storage coke from Pepsi. This deal, which was worth $3 billion in money at the time, shows us how drastically the swap was going even recently.


Although money has the ability to compare to barter, it is clear that barter's shortcomings do not necessitate it. Therefore, examining what purposes the primitive coins used before coins served in societies gives us a more accurate idea of ​​how and why money came into existence.


What is the Purpose of Money?

First, we need to understand the difference between money and primitive money. For a commodity to be called "money," it needs three basic properties:


  1. being a measure of value and a unit of account,

  2. being a medium of exchange,

  3. be a store of value.

Primitive coins are commodities that have some or all of these characteristics and are not coins or derivatives of coins (such as banknotes).


Tambua: Whale Teeth Used as Money

Like many technological inventions, primitive coins also had different purposes for their first use and the tasks they assumed later. Objects used as ornaments in religious rituals or in daily life began to function as money over time. It was cultural and social values, not commercial and financial criteria, that caused the majority of society to agree on the value of such objects. Whale teeth called tambua used in Fiji are among the best examples of primitive coins. The tambua, which is still used as an important part of official ceremonies today, also had an important place in religious ceremonies and as an ornament. Although its commercial uses have been overshadowed by its cultural value, the tambua has at times fulfilled the functions of money. Even after 1874, when Fiji Island became a part of Britain, local governors preferred to be paid in tambua instead of sterling, saying they could show their prestige this way.


Seashells Can Also Be Used As Money!

Although they are ornamental items, seashells, which are reliable currencies due to their easy counting and non-corruption, and their inability to imitate, also have an important place among primitive coins. From West Africa to Oceania, from North America to China, shell coins have been used for shopping in many parts of the world for a long period of time.


In Classical Chinese, "money" was denoted by the pictograph of the seashell, and bronzes hammered into shells were counted among the earliest prototypes of the coin. Moreover, seashells became popular commodities again, just like barter, when coins failed to do their job throughout Chinese history.


In the colonies of the Europeans, seashells continued their existence for a long time as a competitor to modern money. It took until the middle of the 20th century for seashells to completely disappear from circulation in Africa.


Coin Age

When metals started to have an important place in the life of ancient people, the first foundation of coins was laid. Metals, which are abundant in nature, have started to be a common value with their use by many different human societies, as well as the interest they see as "ornamental goods."


Metals were also durable, easily transportable, and divisible. These properties of metals paved the way for their use as money. The use of metals for payment became common, especially in Babylon, with an early banking system. This system, which started with grain products being brought to the temples and recorded, gradually included other agricultural products and metals such as silver and gold.


Temples were safe places to hold these precious metals, and customers could receive some or all of the deposit through their receipts written on clay tablets. Payments made through these deposits became increasingly common and the usage areas of metals in trade expanded considerably.


Coin Revolution in China

Around 1000 B.C., during the Zhou Dynasty, bronze swords, hoes, and shovels were used as money, as well as the bronze seashells we mentioned earlier. About 300 years later, the first coins were introduced in China as a result of a process completely independent of the Lydian one, and at about the same time as the Lydian one. Unlike the Lydian ones, these coins were not made of a mixture of silver and gold, but of the less valuable bronze. The holes in the middle, characteristic of coins in China, also appeared as a result. Because the amount of money to be used in payments was high and the coins were carried more easily by threading through the holes in the middle.


Lydians and the Invention of Modern Money

By the 7th century, coins, which are the ancestors of today's coins, began to be used in Lydia. After that, money began to spread at an incredible rate. The Ionian city-states did not hesitate to purchase this technology from their commercial partner, Lydia. Through them, it spread to other Greek city-states in the Aegean, and to the four corners of the Mediterranean and the Black Sea as a result of the Greek colonization movements and commercial expeditions.


In the 5th century, the satraps in the Persian Empire started to mint their own money in the satrapies they came to power, and the Greek city-states saw money minting as a symbol of their independence. B.C. In 450, Athens increased its influence over these states by imposing the use of the Athenian drachma on its allies and placed Athens at the center of their trade networks in the Aegean. The usage area of ​​the Athenian drachma was not limited to the Mediterranean and Black Sea basins. B.C. The Athenian drachma, dating from 500-485 years, has been found near the Pakistani city of Charseda, 4000 kilometers from where it was produced. Money, which has become a symbol of political power and sovereignty, maintains this feature today.


Conclusion

Although interdisciplinary work is common in economics, it is obvious how important an interdisciplinary approach is, especially in monetary policy. Money is a commodity beyond its economic functions, as evidenced by the processes it went through during its emergence. The value of money affects the extent to which it fulfills its commercial and financial functions, as well as the power of the political authority that prints the money, how money shapes social classes, and how people who use it perceive it.


Having a more comprehensive understanding of money is critical for future policies in the world economy, where inflation is reviving, and in countries like Turkey, which are struggling to maintain the value of their currency. Controlling money by taking into account the social classes of the society that uses it and the perceptions of the people who use it, as well as the economic activities it gives life to, will help monetary policies to have the desired effect.



References:
  1. G. Davies. (2002). A History Of Money. ISBN: 978-0-7083-1717-4. Yayınevi: University of Wales Press.

  2. W. Goetzman. (2016). Money Changes Everything: How Finance Made Civilization Possible. ISBN: 978-0-?91-14?78-1. Yayınevi: Princeton University Press.

  3. P. Einzig. (2021). Primitive Money: In Its Ethnological, Historical And Economic Aspects. ISBN: 1483124738. Yayınevi: Pergamon.

  4. P. Conradi. Pepsico Sets $3 Billion Barter Deal With Soviets. (30 Kasım 2021). Alındığı Tarih: 19 Kasım 2021. Alındığı Yer: | https://web.archive.org/web/20230000000000*/https://www.washingtonpost.com/archive/business/1990/04/10/pepsico-sets-3-billion-barter-deal-with-soviets/d5c3d727-2808-463a-b956-15245ae11bed/

  5. Classical Numismatic Group. A Truly International Currency. (30 Kasım 2021). Alındığı Tarih: 19 Kasım 2021. Alındığı Yer: | https://web.archive.org/web/20230000000000*/https://www.washingtonpost.com/archive/business/1990/04/10/pepsico-sets-3-billion-barter-deal-with-soviets/d5c3d727-2808-463a-b956-15245ae11bed/

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